WASHINGTON (Reuters) - U.S. Representative Chris Collins, an ally of President Donald Trump charged with taking part in an insider trading scheme, halted his campaign for re-election on Saturday, as Republicans sought to minimize the damage from his case ahead of November's midterm elections.

Collins said in a statement his decision was in the best interest of his constituents in New York, as well as the Republican Party and "President Trump's agenda."

Collins was charged earlier this week with taking part in an insider trading scheme involving an Australian biotechnology company, Innate Immunotherapeutics LTD, on whose board he served. He has denied the charges.

Collins, 68, said he would fill out the remaining few months of his term in office. "I will also continue to fight the meritless charges brought against me and I look forward to having my good name cleared of any wrongdoing," he said in the statement posted on Twitter.

Republican leaders backed Collins' move.

"I respect Chris Collins' decision to step down while he faces these serious allegations. As I've said before, Congress must hold ourselves to the highest possible standards," said Representative Steve Stivers, chairman of the National Republican Congressional Committee, which works to elect Republicans to the House of Representatives.

Republicans are nervous about their prospects for retaining their majorities in Congress in the Nov. 6 election, in which all 435 House seats and 35 of the 100 Senate seats will be up for grabs. Democrats need to pick up 23 seats to take control of the House.

Collins, who was one of Trump's earliest supporters in Congress, had been seeking a fourth two-year term in the solidly Republican 27th congressional district in the western part of New York.

Non-partisan analysts had predicted Collins would win re-election, but his indictment put Republicans on the defensive.

House Democratic Leader Nancy Pelosi called Collins' decision to halt his campaign too little, too late and said he should resign. "Speaker (Paul) Ryan must call on Congressman Collins to resign," she said in a statement.

Democrats have said the charges against Collins are an example of a "culture of corruption" under Trump, pointing to ethics scandals that have ensnared several cabinet members and to the trial of Trump's former campaign chairman Paul Manafort on bank and tax fraud charges.

REPLACING A CANDIDATE

Although Collins has said he is halting his campaign, New York state law restricts political candidates from being easily replaced on ballots, unless a candidate dies, moves out of state or is nominated for another office.

"The only way he (Collins) can be replaced is if the Republicans are brazen enough to run him for another office," said Jerry Goldfeder, special counsel at Stroock, a law firm in New York.

One Republican operative said it was likely local officials will nominate Collins to a clerkship, so as to remove him from the House ballot. Erie County Comptroller Stefan Mychajliw said on Saturday on Twitter that if this happens, he will seek the nomination for the Republican Party to run against Democrat Nate McMurray for the House seat.

Republicans were also given cause for concern about November after their underwhelming showing on Tuesday in a special election for a House seat in a reliably conservative district of Ohio. Republican Troy Balderson appeared to eke out a victory against Democrat Danny O'Connor, but that is not yet certain, as he had a tiny margin, and state officials must still count thousands of provisional and absentee ballots.

The indictment issued on Wednesday charged Collins, his son, Cameron, and Stephen Zarsky, the father of Cameron Collins' fiancee, with securities fraud, wire fraud and other crimes. All three defendants pleaded not guilty.